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TMI Blog2014 (11) TMI 772X X X X Extracts X X X X X X X X Extracts X X X X ..... rief are that the assessee was engaged in the business of manufacturing of telecom cables, telecommunication equipments, ally/aluminum conductors and networking solutions. During the year under consideration, erstwhile wholly owned subsidiaries of the assessee company, viz, Sterlite Telelink Ltd. (STLL) and Sterlite Telecom Ltd. (STL) have been amalgamated with the assessee company w.e.f 1st April, 2006. The company has also acquired PTL Division of M/s Sterlite Industries (I) Ltd., as a going concern. In the case of assessee survey proceedings u/s.133A of the Act was carried out on 01.12.2006 at its unit S.R.No.209 Pipria, Silvassa. The cash, jewellery and stock found during the course of survey was tallied with the books of accounts. The assessee filed its return electronically declaring total income at Rs. NIL on 31.10.2007. The assessee has computed profit of Rs. 52,61,65,646/- under MAT provisions. The assessee has also filed photocopy of the F-return acknowledgement, computation of income, etc., on 18.11.2007. The case was processed u/s 143(1)(a) of the Act on 06.11.2008 and was selected for scrutiny and notice u/s 143(2) of the Act was issued on 18.09.2008. Notice u/s 142(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claimed has to be allowed. Thus, this ground of appeal is allowed." 4. Against the aforesaid findings of the CIT(A), Revenue is in appeal before us. 5. Learned DR submitted that the assessee in this case has not valued stock of shares and securities in its books of account in accordance with the method of "cost or market price", whichever is lower. He further submitted that if this method is not followed in writing and preparing accounts consistently, the assessee cannot claim a notional method of stock valuation only for computation of income by the income tax authorities without following the same method in writing and preparing accounts. He also submitted that an assessee after having made entries in the books of account consistent with the method of accounting followed by him cannot be permitted to seek assessment of his income for income tax purposes on a different basis on the ground that another basis may also be permissible under the method of accounting followed by the assessee or has been upheld in certain judgment of a High Court or Supreme Court. He also submitted that the treatment given by the assessee to these amounts as integral part of cost of assets is in acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the option. It has been submitted that (1) SEBI guidelines mandate that the ESOP expenses should be debited to the P&L Account, (2) the liability was not a contingent or notional liability but an ascertained liability and it was also not a capital expenditure, (3) ESOPs were granted to the employees of the company as per the scheme for motivating them to work for the company for a certain number of years and since these were taxable in the hands of the employees, the expenditure was allowable as revenue deduction. We found that the very similar issue has been decided by the Mumbai Bench of the Tribunal in assessee's own case in ITA No.7136/Mum/2004 for A.Y.2001-02 & 2002-03 in favour of assessee regarding the claim of assessee for ESOP expenses. The CIT(A) after considering the aforesaid decision of the Tribunal allowed the claim of assessee for ESOP expenses. Respectfully following the order of the Tribunal in assessee's own case, we are of the considered view that the CIT(A) has rightly allowed the claim of the assessee. Hence, we uphold the decision of the CIT(A) regarding allowing ESOP expenses claimed by the assessee and dismiss the ground No.1 of the Revenue. 8. So far a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In view of this, the Assessing Officer is directed to treat the deferred sales tax liability as capital receipt. Accordingly, this ground of appeal is allowed." 11. Learned DR submitted that provisions of section 41(1) of the Income-tax Act are clearly applicable in the case of the assessee and the benefit received by the assessee company of Rs. 34,79,580/- is revenue receipt, therefore, the CIT(A) has erred in allowing the same. 12. Learned AR, on the other hand, submitted that in assessee's case sales tax liability amounting to Rs. 1,95,60,750/- is taken over by SICOM at the Net Present Value during the financial year ending on 31st march, 2007 of Rs. 1,60,81,170/-. The AO did not follow the decision of the Tribunal in assessee's own case for AY.2001-02 (ITA No.7136&7177/Mum/2004, dated 8-1-2008. The learned AR further submitted that the substance of the transaction as contained in the Maharashtra Sales Tax Act as well as the circulars issued by the CBDT is that sales tax is deemed to have been actually collected by the sales tax authorities and disbursed as loans. Such government order also provide that the entries shall be made in the government accounts giving effect to de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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